PRACTICE QUESTIONS ON MARKET STRUCTURE.docx

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1、PRACTICE QUESTIONS ON MARKET STRUCTURE1. Which of the following is probably the worst example of a perfectly competitive market?a. the market for cornb. the markel for automobilesc. the stock marketd. the market for wheatFor a perfectly competitive firm,a. the marginal revenue curve and (he demand c

2、urve are (he same.b. the marginal revenue curve and the marginal cost curve are the same.c. the supply curve and the marginal revenue curve are the same.d. the demand curve and the marginal cost curve are the same.e. none of the aboveWhich of the following is not an example of a legal barrier to ent

3、ry?a. a beauticians licenseb. a patentc. exclusive ownership of raw materialsd. a public franchisec. a copyrightWhich of the following statements is true?a. The monopolist can sell all it can produce at the market price.b. The marginal revenue curve of (he single-price monopolist lies above its dema

4、nd curve.c. The marginal revenue curve of the single-price monopolist is the same as its demand curve.d. The marginal revenue curve of the single-price monopolist lies below its demand curve.2. In maximizing profits, a single-price monopolist will charge a price that isa. less than marginal cost.b.

5、equal to marginal cost.c. greater than marginal cost.d. There is not enough information to answer the question.18. Which of the following is an example of a monopolistic competitor?a. General Motorsh.a wheat farmer in Iowac. a long-distance telephone companyd. a family-owned Italian restaurantWhich

6、of the following industries is the best example of monopolistic competition?a. cottonh.electricity generationc. automobilesd. service stationsThe monopolistic competitor produces the output at whicha. price equals marginal cost.b. marginal revenue equals marginal cost.c. there is resource allocative

7、 efficiencyd. average total cost is at a minimum.3. In the theory of perfect competition,sellers of the product are not influenced by other sellers and therefore have virtually complete control over (he production and pricing of their product.a. buyers of the product may have a preference as to whom

8、 they purchase from based on brand loyalty.b. buyers and sellers of the product know everything that there is to know about the product.c. it can be quite expensive for a firm to enter this type of market, but once the firm is established, it will be a profitable venture.4. A “price taker” is a firm

9、 thata. does not have the ability to control the price of the product it sells.b. does have (he ability, although limited, to control the price of the product it sells.c. can raise the price of the product it sells and still sell some units of its product.d. sells a differentialed product.e. none of

10、 the aboveThe demand curve for a perfectly competitive firma. is downward sloping.b. is upward sloping.c. is perfectly horizontal.d. is perfectly vertical.e. may be downward or upward sloping, depending upon the type of product offered for sale.5. The perfectly competitive firm will seek to produce

11、the output level for whicha. average variable cost is at a minimum.b. average total cost is at a minimum.c. average fixed cost is at a minimum.d. marginal cost equals marginal revenue.6. Suppose Finn X is a monopolist and is receiving positive economic profits. What prevents other firms from directl

12、y competing away the profits?a. high barriers to entryb. antitrust lawsc. low barriers to entryd. diseconomies of scalee. none of the aboveWhich of the following is the best example of a monopoly?a. a local power utilityb. a fast-food restaurantc. a department stored. a construction firmExamples of

13、perfect competition includea. some agricultural markets.b. the automobile market.c. the soft drink market.d. a and ce. a, b, and cThe theory of perfect competition generally assumes thata. sellers act independently of other sellers, but buyers do not act independently of other buyers.b. buyers act i

14、ndependently of other buyers, but sellers do not act independently of other sellers.c. buyers and sellers act independently of other buyers and sellers.d. neither buyers nor sellers act independently of other buyers and sellers.7. Perfectly competitive industries area. difficult to enter because the

15、re are already so many producers in the industry.b. not particularly appealing or attractive to enter because there tend to be so many buyers that it is difficult to deal with them.c. relatively easy to enter but not so easy to exit from.d. a and be. none of the aboveMarginal revenue isa. total reve

16、nue divided by the quantity of output.b. total profit minus total costs.c. the change in total output brought about by using an additional unit of a variable input.d. the change in dollar receipts brought about by selling an additional unit of the good.e. the change in total revenue minus the change in total costs.